What did the railway boom of the 1800s, commercial aviation boom of the mid-to-late 1900s and the relatively recent internet boom have in common?
All three had profound effects on the way we live. The first, which started in the UK, helped open the frontier lands in North America and Australia and allowed their emerging economies to prosper. The second, by making it easier to visit the far-flung corners of the earth, did a similar thing for the global economy; while the third gave us access to the world from our desktop. Naturally, such exciting industries attracted fevered interest from stockmarket investors, who, in the overwhelming majority of cases, went on to lose vast sums of money.
Despite being genuine 'growth sectors' in their day, the massive amounts of money invested, on average, achieved negative returns. Ponder that reality for a moment—although our economies and lives improved dramatically, investors would have been significantly better off leaving their cash under the mattress. How is that so?
System mechanics
The answer to that question lies less in the stockmarket and more with the mechanics of the system in which it operates. Capitalism is very effective in ensuring that the lion's share of gains made from so-called 'new paradigms' end up in the pockets of consumers rather than investors. In each case, the stockmarket served its rightful purpose of helping entrepreneurs raise capital and use those funds to advance society. The problem is that it did its job so well that the flood of investor money never stood a chance of eking out a decent return. There were too many animals drinking from the same waterhole for all but a few to slake their thirst. Add in the fact that promoters (our word for investment bankers) were pushing some questionable products to hungry investors (sucking out more than their fair share of cash) and the end result isn't really a surprise.
Which brings us to Australia's ageing population. It's nigh-on impossible to pick up a newspaper these days without reading about the baby boomers' impending retirement. Although this fact has been known for years, the investment sales pitch has become especially strident lately. And subscribers are responding—we've received many phone calls and emails from subscribers interested in positioning their portfolios to take advantage of the ageing population.
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